The political fortunes of former Senate majority leader Malcolm Smith may have plummeted, but his business prospects are looking up. Democrats say the Queens lawmaker, whose hold on the Senate slipped away after falling victim to a coup this summer, is maneuvering to take advantage of one of the largest gambling ventures in New York history.
Demoted by his colleagues, Smith isn’t eager to stick around Albany much longer. And he may soon get the chance to cash in his chips. In a few weeks, Governor David Paterson and legislative leaders are expected to announce the winner of a highly secretive and nearly decade-long competition for the rights to develop a casino at the Aqueduct racetrack in Queens. According to sources, Smith is urging the Senate to get behind Aqueduct Entertainment Group, one of the lesser-known bidders. The consortium happens to include one of Smith’s former business partners and Smith’s closest political ally.
Could Smith’s golden parachute be landing in Ozone Park as a future casino partner? Smith’s colleagues think it’s a strong possibility. “He’s looking for an exit plan. What better place than that? Do you think he’s going to be one of 32 members again? He wants to be sure he’s making a good living,” says a Senate Democrat.
AEG, which is one of six companies vying for the contract, is headed by Richard Mays, a Little Rock attorney who raised money for President Clinton. Listed as a co-developer is the Darman Group, which is owned by Darryl Greene, who pleaded guilty in 1999 to fraudulently billing city agencies $500,000 in fees connected to hospital projects. When Smith became the Democratic Senate leader in 2006, the Daily News reported that he and Greene had incorporated Darman together in the late nineties. (Smith, who also ran a failed title-insurance company, says he divested from Darman when elected in 2000.)
Another co-developer in the AEG group is Empowerment Development Corporation, which is run by Smith’s onetime boss, Reverend Floyd Flake, a former congressman. The pastor of a megachurch in the lawmaker’s district, Flake was instrumental in guiding Smith to elected office and has advised him ever since. “Smith clearly prefers them, and he clearly prefers them because of Flake’s involvement,” says a Senate Democrat.
AEG’s competitors include Las Vegas mogul Steve Wynn and SL Green Realty Corp. The latter is backed by Hard Rock Entertainment and BET billionaire Robert Johnson. While Wynn may be the most prominent gaming figure in the contest, he came under scrutiny in an internal Senate report on the bidders that was distributed to lawmakers last month. “Wynn doesn’t really care about the facility or horse racing. If he had it his way he would dismantle the grandstand and use the property for other uses,” a copy stated. The report, which was prepared by a former aide to Smith, doesn’t mention Greene by name, much less his legal history.
A spokesman for Smith insisted he’s not involved in the casino talks: “Senator Smith has a long personal relationship with Reverend Flake, but never in the past, and certainly not now or in the future, will that personal relationship bear any influence on a decision the senators make related to state business,” says the aide.
Albany is counting on the slot machines, along with new hotels and restaurants, to help patch up deficits and breathe life into Aqueduct, a peeling, soggy, cavernous track (described by a former state official as “the hottest-burning circle of Dante’s inferno for horseplayers”). The project is expected to net the state $1 million a day. For the bidders, the rights could pay even greater dividends as the state softens to legalized gambling. “It’s a foothold for casino gambling, which many think is inevitable given the state’s dire fiscal situations. So the stakes are even higher than they appear,” says the official.
Whether Smith will get his way is unclear. Paterson hasn’t tipped his hand, and Assembly speaker Sheldon Silver, who also gets a vote, is mum. Says a Senate Democrat: “We may legalize gambling, and you want somebody who has a plan that’s worthy of a full-blown casino.”